Three years of inflation means £10,000 isn’t worth the same anymore. Make the personal allowance £11,106 instead

Sep 19 2012

Chief Secretary to the Treasury Danny Alexander has called for the Personal Allowance of tax free income to be increased to £10,000 by April 2014.

From April next year, we will have lifted two million people out of income tax altogether and provided a tax cut of almost £550 to over 20 million low and middle earners.

Lifting the personal allowance to £10,000 would provide a further £160 tax cut to low and middle earners and take hundreds of thousands more out of tax.

He is right but as we’ve pointed out before, the original promise was £10,000 from April 2011 and with every year that passes, inflation eats away at the value of that promise. It’s just not economically accurate for him to say the Government is “within touching distance” of meeting the manifesto pledge. The manifesto promised to:

“raise the personal allowance to £10,000 for the start of the financial year 2011–12”

Implementing it three years later than promised is one thing, but £10,000 back in 2011 simply isn’t the same as £10,000 in 2014. In fact, with the Retail Prices Index increasing so quickly, the equivalent figure would be £11,106, according to Treasury predictions in the Budget.

Mr Alexander is right to call for the Personal Allowance to be raised and right to push for his manifesto pledge of a £10,000 allowance to be implemented. But it should be implemented in full and the silent thief of inflation should not be allowed to swindle taxpayers into getting less than we deserve.

Tell the Chancellor he needs to raise it to £11,106 in 2014, Mr Alexander, and then you can honestly claim to have belatedly lived up to your manifesto promise. Better still, tell him to do it in 2013 instead.Chief Secretary to the Treasury Danny Alexander has called for the Personal Allowance of tax free income to be increased to £10,000 by April 2014.

From April next year, we will have lifted two million people out of income tax altogether and provided a tax cut of almost £550 to over 20 million low and middle earners.

Lifting the personal allowance to £10,000 would provide a further £160 tax cut to low and middle earners and take hundreds of thousands more out of tax.

He is right but as we’ve pointed out before, the original promise was £10,000 from April 2011 and with every year that passes, inflation eats away at the value of that promise. It’s just not economically accurate for him to say the Government is “within touching distance” of meeting the manifesto pledge. The manifesto promised to:

“raise the personal allowance to £10,000 for the start of the financial year 2011–12”

Implementing it three years later than promised is one thing, but £10,000 back in 2011 simply isn’t the same as £10,000 in 2014. In fact, with the Retail Prices Index increasing so quickly, the equivalent figure would be £11,106, according to Treasury predictions in the Budget.

Mr Alexander is right to call for the Personal Allowance to be raised and right to push for his manifesto pledge of a £10,000 allowance to be implemented. But it should be implemented in full and the silent thief of inflation should not be allowed to swindle taxpayers into getting less than we deserve.

Tell the Chancellor he needs to raise it to £11,106 in 2014, Mr Alexander, and then you can honestly claim to have belatedly lived up to your manifesto promise. Better still, tell him to do it in 2013 instead.